Concerned over the continuing decline of the peso, Malacañang asked the Bangko Sentral ng Pilipinas (BSP) yesterday to start defending the currency "a little more vigorously" against the dollar.
The peso broke through the critical barrier yesterday, dipping to 43.40 to the dollar at the close of trading.
But BSP Gov. Rafael Buenaventura said intervention at this point was still not necessary, saying the BSP would only do so to ward off speculators taking advantage of the situation.
Executive Secretary Ronaldo Zamora said the BSP cannot invoke forever the policy of simply letting market forces determine the peso-dollar exchange rate.
"The BSP has always been saying that we should let the market forces decide. But at some point, they have to start defending the peso," Zamora told a local radio station.
He said President Estrada is deeply concerned, but not alarmed, over the possible impact of the peso's decline.
"The President is always concerned when it comes to this. Even on his desk, he has a monitor that shows the movement of the peso and the stock market," he said.
The position taken by Zamora, one of President Estrada's chief political advisers, was relatively stronger than that of the Economic Coordinating Council (ECC), whose members include Finance Secretary Jose Pardo and Buenaventura.
"We just have to look at the economic fundamentals versus the other currencies similarly battered," Buenaventura said. "We come in from time to time to stop speculation, but generally we let market forces take over."
The ECC earlier reassured the President that the peso's decline to a 19-month low of 43 to $1 was merely temporary, and that it would recover soon, even without direct intervention.
For his part, Pardo said the government has not been actively intervening in the foreign exchange market in order to see the real, and not the artificial, value of the local currency.
Pardo agreed with the BSP's position to allow the free float of the peso which would reflect its true value.